Ready, Aim, Think: Innovation – The $64 Million Question

Something has to give in this province. After all, the numbers don’t lie: Nova Scotia had the worst economic performance of any province during the past two decades. Outside of Halifax, our population is aging and stagnant and our traditional skill sets are becoming obsolete. Early this year, Nova Scotia’s auditor general warned that the province’s debt is limiting the government’s ability to deliver basic public services. Even the biggest government procurement project in the nation’s history isn’t, by itself, going to change our story arc. So, is it last man out turns off the lights? Of course not. Innovation, today’s thinking goes, is what allows an economy to grow quickly and create new jobs as old ones disappear. Premier Darrell Dexter, in his last state-of-the-province address called the developing of “new industries and a new understanding of what will work in the future economy” Nova Scotia’s potential “game changer.” Except how do we turn this potential into a bright new reality? We decided to ask three people likely to have some answers. Gerry Pond is the chairman of Saint John, N.B.-based Mariner Partners Inc. and an investor in some of the most successful startup companies in Canada in the last decade. Erica Fraser is the manager of technology commercialization for the engineering and science faculties at Dalhousie University. Ray Ivany is the president of Acadia University. We met in the executive offices of The Chronicle Herald on a mild spring afternoon that was perfect for such a forward-looking discussion. What follows is an edited and condensed version of a conversation that began with a simple question: Why does innovation matter? Fraser: Innovation is what is going to make us smarter and bring our economy forward. It doesn’t have to mean invention. It can mean new ideas, new solutions and new ways of looking at things that are really going to make us more effective and more profitable. Ivany: I would agree that innovation on the economic side is about wealth creation through knowledge. I have always liked Robert Reich’s definition, who basically said that capital can move at the press of a button. What’s really crucial is that when a product or service touches down — whether in nation state or in the company — how much value can you add. Pond: It can’t just be cool. It has to generate value for society. And through that value, you get wealth creation, which drives the economy. Why are some people more innovative than others? Ivany: That’s the $64-million question. I do think there are some cultural aspects to it. Historically, if you look at this part of the world, particularly in pre-Confederation period, it was a very vibrant entrepreneurial part of the world. There was a culture here and it’s still here. Why is that important? It sets expectations from the very earliest days. And that expectation is what ultimately leads to the action itself. Pond: Studies say that about one-third is DNA, based on something that comes with you when you were born. The rest of it is the ecosystem in which you are born. I don’t think we should look at it from the standpoint of “Let’s go find some people who were born that way and move them to the Maritimes.” It’s a matter of saying, “Let’s build an ecosystem that supports innovation.” What is the state of innovation in Nova Scotia? Fraser: It’s growing. We’re on the starting point of something that will spiral into something hopefully huge and hopefully that will accelerate as we make progress. We have companies doing some very interesting things. We have top-quality post-secondary institutions. We are training highly qualified people. We have a reasonable cost of business here. There are a lot of reasons to be innovative in Nova Scotia. Ivany: I think we are on the nice part of a growth curve in terms of the state of innovation. I think we are entering a phase where that capacity we have at colleges and universities in the province to assist in getting that kind of capacity out is really on an upswing. Can innovation be stimulated? Ivany: A lot of the R & D capacity in Atlantic Canada is embedded in the post-secondary sector. You have got to get more of those ideas out of the institutions and you need more partnerships between the institutions and entrepreneurs and innovators with ideas. Pond: Countries around the world that really excel at innovation have been able to take their research community and focus some government policy and private-sector initiatives and create world-class companies in some cases from places with a population just slightly larger than Atlantic Canada. I would like to see the Atlantic region pick a few strategic goals. We should talk about the City of the Maritimes. It is actually two-million people and six cities where, in my industry, 90 per cent of the IT software development is taking place. It’s a matter of saying, ‘Let’s build an ecosystem that supports innovation.’ – Gerry Pond, chairman, Mariner Partners Inc., Saint John Can governments afford not to invest in innovation? Fraser: We need to think of innovation as an investment in our long-term viability. It is a figure on this year’s bottom line, but it has lasting effects. And that kind of investment for the future means that we will continue to be viable going forward. Because if we’re just concerned that “Well, we’re doing well enough right now,” then all it takes is one competitor or somebody else to innovate and you’re knocked out of the playing field. Pond: (Not investing in innovation) is a recipe for a decline in our economy. The good news is that many startup companies, for example, the ones that are in the news a lot — Facebook, Google, LinkedIn — did not require a lot of capital. You can get a product prototype built for $25,000-$50,000. So we can’t think that all the research is big, deep and expensive. Some of it is, but we have to be encouraging small amounts of R & D and innovation all of the time just to stand even. Who are the most innovative Maritime companies? Fraser: A couple of the obvious ones would be Ocean Nutrition NS and Acadian Seaplants – both doing innovative things related to the ocean. Similarly, in aerospace and defence, people like Brooke Ocean that’s now part of Rolls Royce are doing interesting things. In the IT sector, there’s a plethora of companies. Sheepdog in Halifax comes to mind. Pond: I don’t think we cannot mention Halifax Shipyards. They didn’t get the contract because they didn’t not do a lot of great work. Q1 Labs and Radian6 created a billion dollars worth of value on an average of 7½ years. On the fisheries, we have Cooke Aquaculture. We have Breviro, which is a sturgeon-farming company, which is getting rave reviews on their caviar. Ivany: LED Roadway Lighting here in Nova Scotia. Tanya Shaw’s Unique Solutions just got another tranche of funding. On the digital media and gaming side, HB Studios and other players. (But) when you mention innovation you don’t need to abandon much of the knowledge that has been built up in the region, whether forestry- or fishing-related. The reality is that if you do something well here it absolutely doesn’t constrain you from being globally competitive. What is one thing that could be done to boost innovation in this region? Ivany: I’ll go to one of my hobby horses: Everywhere that we have a primary base of activity that we look harder at, what kind of secondary and tertiary layers you can build. That’s why I mention shipbuilding. I have no doubt that Halifax Shipyards will do an extraordinary job on the actual contract. The question is how many other technologies and patents are going to spin off that will allow us to sell those products and services around the world as well. Fraser: On my wish list: Increasing the interaction between post-secondary institutions, our researchers here and industry is a win-win. Pond: Lock the three Maritime provinces on a given topic. Something of substance that needs major reform: health system and education system and perhaps highways. Pick those three areas and create a Maritime agency for improvement. You could break it down so that it’s manageable chunks, but let’s get serious. The reason I go to three provinces is because you probably need a bigger critical mass and also to get more brains working on it. Where does the Halifax shipbuilding contract fit into the innovation puzzle? Pond: It fits in because even though they (Halifax Shipyard) have this contract, they still have to do it effectively and efficiently. They have to get innovative in every component of that business. Now, I’m not going to tell Jim Irving what to do, but I think that’s going to be a hotbed of innovation. Fraser: One of the things they had to do when putting together the bid was have a value proposition for the area and that’s going to include things like building up suppliers and it includes the universities as well. The ripple effect is going to go through every area, industry and government, and will have some really positive effects for the region. Ivany: First, it’s psychological. That was a big win and they deserve huge credit. The second is my fixation on how to vacuum up every last bit of learning. I’m still looking again for those secondary and tertiary industries that create other opportunities. The project is of such a scale that it does have the opportunity to do that rising-tide-raising-all-ships phenomenon.